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Huawei's epic PR fail

Huawei has spent millions of dollars attempting to burnish its public image outside China in recent years. The telecommunications giant has sponsored sporting teams, hired lobbyists and set up research institutes in an attempt to portray itself as open and transparent.

In reality it remains a paranoid and secretive organisation.

The Australian Financial Review got a first hand look at this on Friday, as part of a government-organised tour which should have been an opportunity for Huawei to showcase its technology. Instead, things got a little crazy when the issue of national security was raised.

In both English and Chinese, Huawei could not have looked more defensive.

In both English and Chinese, Huawei could not have looked more defensive. The problems began just minutes into a tour of the company's giant, low rise research and development campus on the edge of Shanghai.

The facility houses 10,000 employees, yet is still not big enough for Huawei's ambitions, and apparently it can't be photographed. Soon after touring the canteen - it can seat 2,000 for lunch - photographers and camera crews were told no pictures were permitted inside its showroom for "security reasons".

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That prompted a little grumbling, but nothing major as a technology evangelist from the company talked us through advances in 5G and how it could be used to drive cars, fly drones and control robots.

Then came the inevitable question about national security - the same question the company has been asked almost every week since the United States banned it from working on government projects in 2011. That's four years ago and yet in its home country Huawei still does not have an answer.

As soon as the question was asked a PR person swooped in and said there would be no comment on this issue. Then the 30-odd foreign and local reporters were told Huawei's name and that of our technology savvy tour guide, Mr Hu, could not be mentioned in any reporting from the day.

"You should not write anything about Huawei in your reports," we were ordered in a tone which harked back to the Cultural Revolution. When it was pointed out Huawei had actually invited the media to visit its campus, the response was telling.

In both English and Chinese, Huawei could not have looked more defensive. AFP

"We didn't invite you," said the PR person. "It was the government that invited you and now you should leave."

That Huawei, the world's biggest telecommunications equipment provider, won't answer this question in China proves firstly its PR is rubbish, but also that it feels no compunction to explain its structure or how it operates. Such a culture within a company trickles from the top down.

It also shows why the Abbott Government quickly killed off suggestions it might lift the ban on Huawei tendering for work on Australia's National Broadband Network soon after it was elected. Despite all Huawei's lobbying those murmurings have not been heard for at least a year.

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It would be a mistake however to believe Huawei's attitude to transparency is universal among Chinese companies. Indeed, at the very next stop on Friday's government-organised tour the perfect counter point was provided.

At the Shanghai Green Valley Pharmaceutical Company they could not have been more open. The chairman, Lu Songtao, gave a frank 15 minute presentation, then spent half an hour on questions, before continuing the conversation over lunch.

There was no hiding that the company was partly state-owned via the Shanghai Academy of Social Sciences, which has a 15 per cent stake. It was clearly explained how the research co-operation worked with this prestigious scientific body and how this had enabled Green Valley to develop an anti-dementia drug which would soon begin clinical trials in Australia.

"We have obtained lots of subsidies from the government," said Mr Lu. "Without the support of the government we could not have achieved what we have so far."

And so within the space of half an hour the Financial Review was shown the new and old face of corporate China.

There's paranoid Huawei that will not answer questions and refuses to explain itself in any detail to its stake holders around the world. Then there's the likes of Green Valley, which represent a new, more open face to corporate China.

Let's hope we see more of the latter.

Angus Grigg is an investigative reporter based in Sydney. He has worked as a foreign correpondent in China and Indonesia, and has won two Walkley Awards. Connect with Angus on Twitter. Email Angus at agrigg@afr.com

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